Qualcomm Technologies Inc has signed memorandums of understanding for sales worth at least $2 billion with top Chinese smartphone vendors, receiving vocal support from the firms as it fights an unsolicited buyout bid from Broadcom Ltd. Lenovo Group, Guangdong Oppo Mobile Telecommunications Corp, Vivo Communication Technology and Xiaomi Communications have expressed an interest in buying Qualcomm components with a total value of no less than $2 billion over three years, the US chip maker said on Thursday.
The non-binding agreement will be subject to further agreements and covers technology related to RF Front-End components, Qualcomm said in a statement. The companies announced the multi-year agreement at a Qualcomm-hosted event in Beijing attended by the US firm’s chairman and chief executive. At the event representatives from the Chinese companies expressed concerns that a possible acquisition of Qualcomm by Broadcom could hurt investment in chip technology.
Broadcom in November made an unsolicited $103 billion bid for Qualcomm, which Qualcomm says undervalues it. A potential merger would likely face regulatory scrutiny in China, where Qualcomm has been fined before over anti-trust issues and where the government is promoting local chip production. China aims to become a dominant global chip maker by 2030 and has allocated extensive public funding to support local firms.
“I was surprised about the reaction of some of those customers but it’s probably what you would expect,” Qualcomm President Cristiano Amon told media. China is currently Qualcomm’s second-largest market but will soon become its top market, said Amon.